Are You Paying The Right Price For Your Property?

In the current optimistic market conditions where prices appear to be reaching record levels frequently, how can you ascertain if you’re paying a reasonable price for a property?

Singapore’s property prices are not cheap, and we all want to avoid the undesirable outcomes of over-paying for a purchase. These could include incurring a higher Cash over Valuation (COV), having to make lifestyle adjustments to afford the increased mortgage payments, or even selling the property at a discount in the future. It’s thus important to pay the right price!

#1 Asking Prices of Similar Units

Gaining knowledge of the current asking prices of comparable units in the development can provide insights into the pricing range that most sellers are seeking for their properties. You can then evaluate whether the other party is setting an excessively high price beyond the market average.

However, it’s common to see units in the same development and stack having different prices or be priced at a premium, and this doesn’t necessarily indicate an inaccurate pricing. These units may have unique factors that justify their higher market value, such as appealing interior renovations, elevated floor levels, or desirable views and orientations.

There are several online property research tools you can use to obtain asking price data. To better match results to your preferred unit, you can also apply additional search filters such as number of bedrooms, floor size, floor level etc.

#2 Recently Transacted Prices

As opposed to asking prices that primarily reflect the seller’s expectations, transacted prices are a more objective measure of a property’s value in the market. By familiarizing yourself with the recently transacted prices, you can form a factual basis for determining a reasonable amount to invest in a property.

To account for changes in market trends, especially in a rapidly evolving market, it’s advisable to examine transactions from the past 6 to 12 months. Transactions older than that may no longer be relevant and might offer an inaccurate representation of current pricing trends.

Aside from indicating a property’s value, recent transacted prices may also affect your loan financing process later on. When determining the amount of financing to offer, some banks conduct property valuations based on recent transactions in the development. If the unit’s purchase price significantly differs from recent transactions, the bank may be unwilling to match it with the valuation, resulting in a reduction in the loan amount you can obtain.

#3 Highest Transacted Price

It may also be useful to look into the highest transacted price for the development, especially if you intend to sell the property for a profit in the near future. The highest transacted price can serve as a pricing ceiling for your property in the near future (assuming there are no new record prices set).

Considering your investment goals and desired returns, and with this pricing ceiling in mind, you can then determine if the asking price is acceptable to you. Online property portals can provide a quick overview of the development’s price trends as well as its highest transacted price.

#4 Property Valuation

Having an understanding of a property’s true value can provide you with the confidence that you are paying a reasonable market price for it. In some cases, you may even come across a property that is undervalued, presenting an excellent opportunity for a good deal.

D.I.Y Online

Online evaluation tools can be a useful resource to determine the valuation of a property. These tools are readily available at no cost, and they generate an estimated value of the property based on the information that you provide. By utilizing a combination of online tools and relevant websites that provide past transaction data, you can obtain a relatively accurate estimate of the property’s value, which can be used to compare against the asking price.

Engaging Professionals’ Help

If you would like to have a detailed valuation and analysis done by professionals, here are two excellent options:

• Bank Indicative Valuations

You can obtain an indicative valuation by contacting your bank as they typically have a panel of valuation companies to assist with the process. This valuation will be considered when you eventually apply for a mortgage loan for your property purchase, and it can impact your Loan-to-Value (LTV) ratio.

• Real Estate Agents

You could also consider seeking advice from reputable agents who can provide you with an accurate estimated valuation of the property. These agents can also assist you in negotiating for a better deal, which is an added benefit to engaging their services. If you need assistance in this regard, please do not hesitate to contact us. We have assisted many clients in their property investment journey and would be happy to guide you as well!

Conclusion

It’s essential to have a good grasp of a property’s valuation and determine the right price to pay. Avoid making decisions based on emotions and be willing to walk away from a deal that doesn’t make sense to you. Remember that the property market is vast, and there will always be other options available that fit your budget and requirements.

We hope that this article has given you valuable insights on how to determine the appropriate purchase price for your property. If you require additional assistance or expert advice, please don’t hesitate to contact us. We’re always available and delighted to assist you!

If you’ve enjoyed reading this, you might want to check out “Buying a Property in Singapore? Don’t Overlook These 4 Factors!”